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What determines the prices of goods and services in a market economy?

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Basic Economics: Prices are set by supply and demand
Basic Economics: In a free market, prices are set by supply and demand

A few days ago, I posted the meme above on the blog’s Facebook page. The meme makes fun of unionized public school teachers, who feel entitled to the same salary and benefits as doctors, software engineers, etc. in the private sector. I thought that all Americans were familiar with basic economics. But judging from some of the comments to the meme, that is not the case. This post will help.

So, the point of this meme is simple, it’s to point out that the teachers who belong to teacher unions are ignorant of basic economics, specifically, the law of supply and demand. As we’ll see in a minute, this is literally lesson 1 of Economics 101.

When there is more demand for a product or service than there is a supply for it, then prices go up. When there is more supply for a product or service than there is a demand for it, prices go down.

A good place to see this explained is in a book by famous black economist Thomas Sowell. Thomas Sowell has written many books, but he wrote one book in particular for people who have no knowledge of basic economics. It’s called “Basic Economics: A Citizen’s Guide to the Economy“. And the first few chapters explain how prices are set by supply and demand:

  1. What is Economics?
  2. The Role of Prices
  3. Price Controls
  4. An Overview of Prices

Most people who commented on the meme had some knowledge of basic economics, and how prices are determined.

Here’s Bruce:

Wages–the prices of labor–are set by free people bidding in an open market for the labor of people willing to work. They are not set by an emperor weighing abstractions. There are 3.7 million teachers working in the US, and only about 5000 professional athletes.

And Chris:

My coworkers and I (we are fintech people with highly specialized knowledge and computer skills) were talking about some computer-related consultants who are so specialized and so good that they command hundreds (if not thousands of dollars per hour). The top of the top cyber security guys, who do presentations at conferences on threats and vectors? Yeah, thousands if not tens of thousands of dollars per hour.

So far, so good. But others argued that the prices of goods and services are determined by a sinister cabal of politicians and other elites, who paid athletes lots of money in order to distract the masses with “bread and circuses”. Now, I know what you’re thinking. How does paying athletes MORE get people to care about sports? It doesn’t. Actually, it’s the (widespread) demand to see the performance of (scarce) elite athletes that causes the wages of those athletes to increase. It’s not a conspiracy – it’s free people making choices about what they want to buy in a free market.

It turns out that there are two views of how wages are set in an economy:

The labor theory of value (LTV) is a theory of value that argues that the economic value of a good or service is determined by the total amount of “socially necessary labor” required to produce it.

LTV is usually associated with Marxian economics… The LTV is central to Marxist theory, which holds that the working class is exploited under capitalism, and dissociates price and value. Marx did not refer to his own theory of value as a “labour theory of value”.

Mainstream neoclassical economics tends to reject the need for a LTV, concentrating instead on a theory of price determined by supply and demand.

Marxists economists believe that the value of a good or service is determined by the social utility of the work produced. But classical (“free market”) economists believe that value is determined by the scarcity of the good or service relative to the demand from consumers.

So, a Marxist economist might say “teaching English is valuable because it is relevant and meaningful”. But, a classical economist would say “conducting a security audit on distributed point-of-sale system is valuable, because few people can do it, but many people want it”.

So, the conspiracy theorists view of economics, which asserts that teachers should be paid more than software engineers and doctors, is actually based on Marxist (atheistic) assumptions. And yet many of the people who hold to the conspiracy view of prices fancy themselves to be Christians and conservatives.

I’ve noticed that school teachers and non-STEM university students and professors are very likely  to hold to the conspiracy theory view of prices and wages. Robert Nozick wrote a paper about why this happens. It turns out that “wordsmiths” (his word) are conditioned by their performance in the classroom to expect success in the free market economy. But when they find that their “brilliance” in English poetry, Medieval history, or lesbian dance theory has no value to anyone else, they fall in with these Marxist assumptions and conspiracy theory views of the economy. It’s a coping mechanism for people who value academic acclaim more than doing something useful for their neighbors.

Consider this article from College Pulse about a survey of 10,590 undergraduate students:

Students with certain majors are far more likely than their peers to approve of socialism. Philosophy majors, in particular, have a positive view of socialism. Nearly 8 in 10 (78%) say they view the economic system favorably, followed by 64% of anthropology majors, and 58% of both English and international relations majors. Accounting and finance majors are least likely to view socialism positively (20% and 22% respectively).

Do you know what accounting and finance students have to study? Basic economics.

I noticed that the practical commenters who were trying to explain why teachers earn less than software engineers all had some experience working for a living in the private sector. A couple of them mentioned how studying economics on their own had led them to a correct understanding of how the economy works. That’s what happened to me, as well.

As soon as I got my first job as a software engineer, and finished my study of Christian apologetics, the very next thing I studied was economics. It was Dr. Jay Richards who got me interested in it, when I heard him speaking about economics in an apologetics lecture for Stand to Reason. I contacted him, and he recommended the works of two famous economists, F. A. Hayek and Thomas Sowell. And that’s what I want to recommend to you, too. Our continued liberty and prosperity depends on ordinary Americans taking the time to educate themselves about basic economics.

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Does abortion reduce violent crime? Does abortion reduce child abuse?

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If abortion reduces crime, why does the evidence show that it doesn't?
If abortion reduces crime, why does the evidence show that it doesn’t?

Grr, my annoying co-workers are at it again this morning. This time, it’s the man who annoyed me about overpopulation fears, which I responded to earlier this week. He says to me this morning that Alabama is going to have a big problem with violent crime because they’ve stopped abortions. These sorts of views are common among TV-watchers, but not among those study-readers.

Life Site News reports on a Yale Law & Economics Research Paper.

First, let’s see the abstract:

Abortion may prevent the birth of “unwanted” children, who would have relatively small investments in human capital and a higher probability of crime. On the other hand, some research suggests that legalizing abortion increases out-of-wedlock births and single parent families, which implies the opposite impact on investments in human capital and thus crime. The question is: what is the net impact? We find evidence that legalizing abortion increased murder rates by around about 0.5 to 7 percent. Previous estimates are shown to suffer from not directly linking the cohorts who are committing crime with whether they had been born before or after abortion was legal.

And now, let’s see the Life Site News article:

Law professors John R. Lott, Jr. of Yale Law School and John E. Whitley of the University of Adelaide found that legalizing abortion increased murder rates by up to seven percent. They concluded that legalizing abortion is a contributing factor to the great increase in out‑of‑wedlock births and single parent families, which in turn contribute to increased crime rates. Since 1970, the percentage of single‑parent households in the United States has nearly tripled, from 11 percent to 32 percent, and the percentage of out‑of‑wedlock births has nearly quadrupled, from 11 percent to 43 percent of all children.7 Children born out-of-wedlock and raised by only one parent have a significantly higher incidence of crime.

There are many other fundamental problems with the conclusion that legalized abortion leads to a decrease in crime.

Statistician David Murray confirmed that young males between the ages of 17 and 25 commit the majority of crimes. However, if abortion had reduced crime, the crime rates in the United States would have dropped first among young people. They did not. Instead, the number of crimes committed by older people dropped first. Nearly 60% of the decline in murder since 1990 involved killers aged 25 and older — who were born before Roe v. Wade.8

Murray also found that other nations with high abortion rates showed a large increase in crime about eighteen years after they legalized abortion. For example, in Great Britain, which legalized abortion in 1968, violent crime has been rising steeply since about 1985 ― exactly when it should have been declining, according to the Donohue‑Levitt thesis. Additionally, Russia, with the highest abortion rate on earth, has experienced a tidal wave of every kind of violent crime following the breakup of the Soviet Union.9

FBI statistics showed that the murder rate in 1993 for 14‑ to 17‑year‑olds in the USA (born in the years 1975‑1979, which had very high abortion rates) was 3.6 times higher than that of kids who were the same age in 1984 (who were born in the pre‑legalization years of 1966‑1970). Additionally, since Black women were having abortions at a much higher rate than White women, we should have expected the murder rate among Black youth to have declined beginning in about 1991. Instead, it increased more than five hundred percent from 1984 to 1993.10

Finally, the huge increase in violent crime that peaked in 1991 and then began to decline is more closely related to the crack epidemic, not abortion. The Donohue‑Levitt study confirms that the crime rate rose and fell exactly where crack cocaine was most easily available ― in the large cities and among young Black males.11 This is also confirmed by the rise in crime during the time period 1984 to 1991, after a decline from 1980 to 1984. If abortion were the primary cause of a decline in violent crime, the crime rate would have been relatively stable during the time period 1980 to 1991.

By the way, a good book to buy on this is John Lott’s “Freedomnomics: Why the Free Market Works and Other Half-Baked Theories Don’t“. One third of the book covers this topic.

And if you’re wondering what caused the decline in violent crime rates in the 1990s, the answer to that is that it was multiple factors. Better policing, mandatory sentencing laws, legalized concealed carry laws, and other factors were responsible.

Abortion and child abuse

Sometimes, pro-abortion people put forward a similar argument about abortion preventing child abuse. This argument seems intuitive, but from an evidence point of view, it’s false.

Here’s a report from Life News about a study out of Bowling Green State University.

Excerpt:

For decades, evidence has existed showing abortion contributes to a rise in child abuse. Now a new study by a post-abortion research institute and Bowling Green State University professors finds that women who have abortions are more likely to abuse their children.

Published in the medical journal Acta Paediatrica, the study found that women who have had abortions are 2.4 times more likely to physically abuse their children. Pro-life advocates say it proves the need for providing women with post-abortion counseling to help deal with the emotional trauma of the abortion.

[…]The authors suggested that “emotional difficulties and unresolved grief responses” from pregnancy loss, whether voluntary or involuntary, could have a negative impact on women’s mental health and lead to unhealthy parenting responses.

According to the Illinois-based Elliot Institute, which released information about the study’s findings, prior surveys “have linked pregnancy loss to an increase in grief reactions, anxiety, depression, sleep disturbances, and symptoms of post-traumatic stress disorder, all of which can have a negative impact on parent/child relationships.”

The post-abortion research group also points to a 2002 study published in the Journal of Child Psychiatry and Psychology that found abortion has been linked to an increase in substance abuse and thoughts of suicide, which could also contribute to child abuse.

The new study also found that women who had more than one miscarriage or stillbirth were more likely to engage in child abuse than women who had just one. However, women who had abortions were more likely to abuse their children whether they had one or more than one abortion.

“Regardless of the specific mechanisms at play, maternal history of one induced abortion does appear to be a marker for increased risk of physical abuse,” the authors concluded.

Whenever I read about how studies contradict people’s intuitions about what will and will not work, it makes me sad that so many people who live life on intuitions and feelings are still allowed to vote. If only we had a society where reason and evidence were seen as indispensable for building up your view of the world.

By the way, if you’re looking for a good article for debating other aspects of the Alabama pro-life law, my friend William, who loves to debate everything, and he always wins, just posted this article about 9 myths about the Alabama pro-life law.

General advice on countering your co-workers

I found that if I passed on TV and movies, I could buy pretty much any book I wanted that has research-based responses to these common questions from secular leftists. All it takes is a commitment to dedicate your book-buying budget to the task of responding to challenges, instead of producing feelings.

I notice a lot of Christian women in my office reading fiction books, while the Christian men are always talking about TV and movies. Fiction and entertainment are useless for putting forward Bible-based views and supporting evidence in controversial discussions. Instead of wasting your money on fiction and entertainment, listen closely to what people in your office are saying, and then purchase and train with resources that help you to serve God in these discussions. Bible verses and prayers alone will not equip you to serve in difficult situations.

News

Report: Chick-Fil-A donates to Southern Poverty Law Center, other anti-Christian groups

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The Southern Poverty Law Center was connected to a 2012 domestic terrorism attack
The Southern Poverty Law Center was connected to a 2012 domestic terrorism attack on a Washington think tank

I’m re-posting my post about the Southern Poverty (SPLC), since it emerged this week that Chick-Fil-A had not only ceased donations to the conservative Family Research Council (FRC), but had now started donations to the Southern Poverty Law Center. You might remember that the SPLC was an accessory to the domestic terrorism attack on the FRC in 2012. That’s where Chick-Fil-A is now.

First, here’s the article from Townhall:

In 2017 Chick-fil-A donated money to the same corrupt SPLC that still outrageously lists FRC as a “hate group.”

[…]Covenant House, a homeless shelter for youth, takes pride in its promotion of all things LGBTQ. They even marched in the New York “Gay Pride” parade to show their inclusivity cred. Guess the Salvation Army (which admittedly has an issue with partially supporting abortion in cases of rape, incest and “life and health” of the mother) should’ve flown some co-opted rainbow colors to keep their hundreds of thousands in funding. Whoops. Looks like Covenant is the new Salvation. 

Chick-fil-A funds the deeply political YWCA, a radically pro-abortion and pro-LGBTQ organization that repeatedly partners with Planned Parenthood.

Chick-fil-A also funds the DC-based New Leaders Council that identifies as a “hub of progressive millennial thought leadership” which exists to “support one another along their individual path to a more progressive political and cultural landscape.”

Chick-fil-A has given a sizable donation ($50k) to The Pace Center for Girls, yet another pro-abortion organization. The education and advocacy group featured radical pro-abortion feminist Gloria Steinem (the “I Had An Abortion” activist who declared that birthing children is the “fundamental cause of climate change”) as their keynote speaker for their most recent girls’ Summit.

[…]Chick-fil-A also gives tens of thousands to Chris 180 ($27,500 in 2017, $25k in 2019), a pro-LGBT behavioral health and child welfare service agency. The organization boasts of being awarded the “Leader in Supporting and Serving LGBT Families and Youth from the Human Rights Campaign Foundation (HRC).” Nothing promotes human degradation quite like the pro-abortion HRC—the multi-million dollar LGBT powerhouse that recently pushed for the legalization of prostitution in D.C.

[…]And then there’s Junior Achievement (JA), which inarguably does some phenomenal work with education and entrepreneurship. They’re the recipients of hundreds of thousands a year from Chick-fil-A. In 2016, though, JA joined a coalition (Georgia Prospers) of pro-LGBT organizations in their “Too Busy to Hate” campaign to politically oppose religious liberty legislation (specifically the First Amendment Defense Act) from passing in Georgia.

So, that’s where Chick-Fil-A is donating the money that you give them for their “Christian chicken”. For my part, I have stopped eating there, because I cannot patronize any organization that gives money to the SPLC.

So, let’s review what the SPLC does.

You might remember how gay activist Floyd Lee Corkins II used the Southern Poverty Law Center’s “hate map” to plan and execute a mass shooting domestic terrorism attack against the Family Research Council office in 2012. But just recently, the SPLC has run into major, major problems.

Let’s start with a summary from the Washington Examiner of what the SPLC has done:

In 2015, the discredited organization was forced to apologize to renowned neurosurgeon and now Housing and Urban Development Secretary Dr. Ben Carson for including him in its “Extremist Files” a year earlier.

Two years before that, an attempted mass murderer had stormed into the Washington, D.C., headquarters of the Family Research Council, a conservative group maligned by the SPLC with its “hate group” label, carrying a firearm and 15 Chick-fil-A sandwiches. His goal was to kill as many FRC employees as possible and smear their faces with the sandwiches. He told the FBI that his choice of target had been inspired by SPLC’s designation of FRC as a “hate group.”

[…]Across the hall from FRC at the time was the headquarters of Alliance Defending Freedom, a conservative legal advocate that has since also landed on the SPLC’s “hate group” list for our work litigating religious freedom, life, and marriage and family issues. We were given this designation by the SPLC even as we were earning nine victories at the U.S. Supreme Court since 2011.

FRC is still listed on the “hate map” on SPLC’s web site.

Big technology corporations like PayPal all partner with the SPLC. I wonder how the people who work for these companies feel about their “business partner” now, after all of these claims of sexual harassment, gender discrimination, and racism have come out.